Opinion
CIVIL ACTION No. 99-586, REF: ALL CASES SECTION "L"(5).
May 22, 2003.
ORDER REASONS
Before the Court are objections to the report and recommendation of the Magistrate Judge filed by The Glorioso Law Firm, A.P.L.C. and Andre Strishak and Andre Strishak Associates, P.C. For the following reasons, the objections to the Magistrate's report and recommendation are SUSTAINED IN PART AND DENIED IN PART.
I. BACKGROUND
This diversity suit arises out of an automobile accident that occurred on December 31, 1998 on Interstate 10 in St. Charles Parish, Louisiana. A 1990 Plymouth Acclaim owned by Rhonda Beasley and operated by plaintiff Robert Allen, Jr. was allegedly in the emergency stopping lane of eastbound I-10 due to a flat tire, when it was struck by a Ryder truck operated by defendant Danni Naor and owned by defendant Ryder TRS, Inc. The car operated by plaintiff Allen burst into flames, killing his mother, Ora Tolliver, and Rhonda Beasley's two children, Cedrica Daniels and Michael Beasley, who also occupied the car. Allen was severely burned and paralyzed; Rhonda Beasley was injured less seriously.
On January 15, 1999, Kim Tolliver, the son of Ora Tolliver, filed suit for the death of his mother in the 29th JDC for the Parish of St. Charles. Kim Tolliver, as provisional curator for his brother, Robert Allen, Jr, subsequently filed a suit in the same state court on behalf of his brother. Patricia Tolliver Dillon and Robert Allen, Sr. filed a survivor and wrongful death suit on behalf of Ora Tolliver, also in the 29th judicial district court. These three suits were removed to this court and consolidated in this section. Rhonda Beasley filed suit in the Eastern District of New York, where the truck was leased; that suit was transferred here and consolidated with the others.
After various motions, dismissals, and partial settlements, this case went to trial against the only Defendant left, DaimlerChrysler Corporation. Several months before trial, Vincent Glorioso, Plaintiffs' trial attorney, consented to surrender his license to practice law because of a disciplinary proceeding not connected with this case and another Louisiana attorney, Remy Fransen, was retained to try the case. The jury returned a verdict for the Defendant. After resolution of these issues, the parties began to dispute disbursement of the funds from the partial settlements which had been deposited in the registry of the Court and the division of legal fees. This Court referred the issue of disbursement of registry funds to Magistrate Judge Chasez. Magistrate Chasez conducted a hearing and has made various rulings, including the latest report and recommendation which is the subject of the pending motions.
Magistrate Chasez' latest ruling involves the dispute between Andre Strishak and Vincent Glorioso (the Glorioso Law Firm) over the percentage of legal fees each was entitled to after the litigation. In this case, the business dealings between Andre Strishak and Vincent Glorioso began in April or May of 1999, when Andre Strishak contacted Vincent Glorioso to determine if the Glorioso Firm was interested in working on the Tolliver case. Initially, the attorneys agreed that the Glorioso firm would be paid on an hourly basis for work performed. Subsequently, in September of 1999, Strishak and Glorioso entered into an agreement for a contingency fee between the parties, which would cover the period commencing October 1, 1999. This contingency fee agreement was signed by Strishak and Glorioso in May of 2000, and provided the following in pertinent part:
1a. If, upon completion of the above actions, the settlement(s) or award(s) are limited to One Million Dollars ($1,000,000), The Glorioso Law Firm will receive thirty three and one third percent (33-1/3%) of the gross legal fee contracted for as per the attached contracts.
1b. If, upon completion of the above actions, the settlement(s) or award(s) exceed One Million Dollars ($1,000,000), the Glorioso Law Firm will receive thirty three and one third percent (33-1/3%) of the gross legal fees contracted for as per the attached contracts less $19,190.00 previously advanced as fees to the Glorioso Law Firm.
1c. The parties agree disbursements for ordinary, necessary and reasonable litigation costs only shall be divided as follows: two thirds (2/3) to Andre Strishak and one-third (1/3) to The Glorioso Law Firm.
During the course of the litigation, in February of 2001, Vincent Glorioso became aware of disciplinary proceedings pending against him and, as of May 2001, he learned that the disciplinary counsel would seek to have the surrender of his license for some period of time to resolve the issue. Glorioso informed Strishak that he would not be able to remain in the case through trial but felt that he could continue through the time of the initial settlement conference in July of 2001. Due to the change in circumstances, Strishak and Glorioso entered into a "superceding attorney fee split agreement" dated June 25, 2001 regarding the fee arrangement. Vincent Glorioso, Andre Strishak and Robert Johnston were all signatories to this superceding agreement. Glorioso had suggested to Strishak that Robert Johnston be substituted in Glorioso's place and go forward with trial in light of Glorioso's disbarment. Johnson signed the agreement, with the understanding that he had not yet reviewed the entire file and he had the option of declining to go forward upon his complete review of the same. Johnston subsequently determined not to become involved in the litigation and timely informed all concerned of his decision. Johnston makes no claim for fees or costs in connection with his brief involvement.
The superceding agreement provided the following in pertinent part:
1a. If, upon completion of the above actions, the settlement(s) or award(s) do not exceed One Million Dollars ($1,000,000.00), The Glorioso Law Firm will receive thirty-eight percent (38%) of the gross legal fee, contracted for as per the attached contracts with the clients, Robert Allen, Jr. and Rhonda Beasley.
1b. If, upon completion of the above actions, the settlement(s) or award(s) exceed One Million Dollars ($1,000,000.00), The Glorios Law Firm will receive thirty-eight percent (38%) of the gross legal fee, contracted for as per attached contracts with clients, Robert Allen, Jr. and Rhonda Beasley, less Twenty-one Thousand Seven Hundred Fifty ($21,750.00) and no/1000 dollars previously advanced as hourly fees to the Glorios Law Firm.
7. The parties agree that all disbursements for ordinary, necessary and reasonable litigation costs shall be paid by the following terms: Sixty-two percent (62%) by Andre Strishak; Thirty-eight percent (38%) by The Glorioso Law Firm.
9. Attorney Robert Johnston will try this case and act as lead counsel in representing the clients with respect to depositions, court conferences, etc. along with the Glorioso Law Firm. Any fee earned by Robert Johnston and/or Adams and Johnston will be taken from the Glorioso Law Firm's share of thirty-eight percent (38%) of the gross legal fee.
16. All parties to this agreement agree that in the event that Robert Johnston cannot perform the responsibilities conveyed to him by this agreement including acting as lead trial counsel, and trying this case, the 38% of the legal gross fee payable to the Glorioso Law Firm and Robert Johnston shall be reduced to 33 1/3% of the gross legal fee as will the costs.
17. This agreement is deemed to have full effect starting May 6, 1999 and remains in effect upon final completion of all legal work including appellate work subsequent to judgment or in the event of discharge by the clients.
WHEREFORE, Andre Strishak, Robert Johnston, Vincent J. Glorioso, Jr. APLC and The Glorioso Law Firm hereby enter this contract . . . which constitutes the sole and entire agreement comtemplated by the parties. It is the intent of the parties that this agreement supercede any and all prior fee split and referral fee agreements, and that any and all prior agreements are hereby revoked and rendered null and void.
When neither Johnston nor Glorioso could continue with the representation of the clients, Strishak was forced to engage other counsel in Louisiana to try the case. Strishak contracted with Remy Fransen to act as lead trial attorney and agreed to pay him 22 1 / 2% of the proceeds realized.
Both Andre Strishak and the Glorioso Law Firm filed objections to Magistrate Chasez' report and recommendation, which awarded the Glorioso Law Firm 33 and 1/3% of the legal fees. In the report and recommendation, Magistrate Chasez identified the legal issue before her as whether or not the June 25, 2001 agreement between Andre Strishak and the Glorioso Law Firm should be enforced according to its terms. Basically, Strishak sought to have the 22 1/2% fee of Remy Fransen to be taken out of the 33 1/3% owed to Glorioso, instead of being deducted from Strishak's 62 2/3%. Judge Chasez applied Louisiana law on contract interpretation, and found that under the clear language and unambiguous terms of the superceding contract, the Glorioso Firm was entitled to 33 1/3% (under provision 16 listed above) and there was simply no basis in the contract for deducting the fee payable to Fransen out of Glorioso's fee.
In response to Glorioso's argument that he should receive a fee based on quantum meruit, Judge Chasez found that the Strishak Glorioso superceding agreement was the type of agreement contemplated under the new rule of Professional Conduct 1.5, which permits written fee agreements between attorneys who jointly assume responsibility for the representation.
Strishak objected to the report and recommendation based on his argument that the 22 1/2% fee paid to Fransen should have been paid out of the 334 1/3% fee to Glorioso. Strishak contends that to interpret the contract as Judge Chasez did results in a windfall to Glorioso, an absurd consequence because it gives the Glorioso Law Firm a reward for conduct making performance of the contract impossible. Strishak cites the Louisiana contract interpretation rule that contracts should be interpreted so as to avoid absurd consequences.
In addition, Strishak relies on Civil Code articles 1873 and 1877, regarding an obligor's responsibility for performance when a fortuitous event prevents performance. Under these articles, an obligor is liable when a fortuitous event that caused his failure to perform has been preceded by his fault without which the failure would not have occurred and, when the fortuitous event makes performance impossible in part, the court may reduce the other party's counter performance. Based on these principles, Strishak argues that the cost of completion of the contract occasioned by Glorioso's fault should be borne by Glorioso out of his agreed portion of the fee. Strihsak also relies on Louisiana Civil Code article 1758 for the proposition that an obligation may give the obligee the right to enforce performance by causing it to be rendered by another at the obligor's expense and recover damages for the obligor's failure to perform.
As further support for his argument, Strishak insists that the superceding attorney fee splitting agreement was dissolved when Johnston decided not to undertake the representation. According to Strishak, when Johnston declined to proceed, it returned the parties back to the status quo. Additionally, in one last attempt to justify his position, Strishak notes that Glorioso voluntarily agreed to reduce his fee by 19% if Johnston completed the contract. Strishak refers to an agreement between Glorioso and Johnston, in which Glorioso agreed to a 50/50 split of the 38% if the case proceeded beyond October 1, 2001. Based on this side agreement, Strishak asserts that it was clear that Glorioso was willing to repair the broken contract by reducing his fee. Therefore, Strishak argues that Glorioso's fee should be reduced and he should only be entitled to a 15 1/2% fee under the circumstances.
Finally, Strishak argues that there are procedural problems with the intervention. In August of 2001, the Glorioso Law Firm filed a motion to intervene in the suit for attorney's fees and expenses due to it. This Court granted leave to allow the intervention on August 14, 2001. Subsequently, when new counsel enrolled for Andre Strishak, on June 21, 2002, Strishak filed a motion to vacate the order allowing the intervention and/or alternatively to require compliance with Rules 24(c) and 5(a) of the Federal Rules of Civil Procedure, which was heard before Magistrate Judge Chasez. Strishak argued that the intervention was not proper because he did not consent to it; he claimed that Glorioso's certification that opposing counsel did not object only referred to the main defendant in the case, who had no interest in the fee dispute. Further, Strishak argued that Rule 24(c) was not followed, because it would have required a contradictory hearing on the threshold issue of the right to intervene. Strishak contended that he was never even served with the motion of intervention. For these reasons, Strishak moved to have the order allowing intervention rescinded under Rule 60, alleging that there was a mistake in the underlying basis for the entry of the order. After a hearing, Magistrate Chasez denied Strishak's motion on June 24, 2002. Strishak now takes issue with Magistrate Chasez' denial of his motion to vacate the order allowing the intervention. Relying on Rule 60, Strishak argues that the order was improper because it was based on a mistake, that is, that the parties had no objections to the intervention. He asserts the same exact arguments as he did in the motion to vacate as originally heard before Magistrate Chasez.
Glorioso objects to Magistrate Chasez' ruling that he is only entitled to the 33 1/3% fee, and not a fee based on quantum meruit. Glorioso asserts that he should receive a fee for the amount of work that he performed, which the Magistrate found to be 75 %. Glorioso relies on the case In re: PE Boat Rentals, 928 F.2d 662 (5th Cir. 1991) for the proposition that attorney's fees may be divided only on a quantum meruit basis. Glorioso contends that the rule of Professional Conduct cited by the Magistrate does not apply because each lawyer in this case did not assume joint responsibility for the representation. According to Glorioso, the Glorioso Firm should be entitled to 75% of 77 1/2% or a total of 58.125% of the gross legal fee.
II. ANALYSIS
This Court must make a de novo determination of those portions of the Magistrate Judge's report, specified proposed findings or recommendations to which objections have been made. 28 U.S.C. § 636 (b)(1)(B) and (C). Having had the benefit of oral argument in this case, and after reviewing the briefs and applicable Louisiana law, this Court must affirm in part the report and recommendation of Magistrate Judge Chasez.
The issues before the Court raise questions regarding the interpretation of contracts. Louisiana law provides that interpretation of a contract is the determination of the common intent of the parties. La. Civ. Code art. 2045. When the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of parties' intent. La. Civ. Code art. 2046. Additionally, the words of a contract must be given their generally prevailing meaning, whereas words of art and technical terms must be given their technical meaning when the contract involves a technical matter. La. Civ. Code art. 2047. Each provision in a contract must be interpreted in light of the other provisions so that each is given the meaning suggested by the contract as a whole. La. Civ. Code art. 2050. Although a contract is worded in general terms, it must be interpreted to cover only those things it appears the parties intended to include. La. Civ. Code art. 2051.
With these statutory rules of interpretation in mind, this Court will address each of the objections to the Magistrate's report and recommendation raised by the parties. The first issue is whether the 22 1/2% fee paid to Fransen should be deducted from the 33 1/3% fee payable to Glorioso. In order to resolve this issue, the Court must look to the agreement between the parties in effect at the time of this dispute. As explained earlier, Strishak, Johnston and Glorioso signed a "superceding attorney fee split agreement" which provided clearly and explicitly that any and all prior agreements were revoked and rendered null and void. Therefore, the superceding agreement must govern the issue of Glorioso's entitlement to attorney's fees.
Strishak argues that when Johnston declined the representation, the superceding contract was dissolved and the parties were returned to where they were prior to June 25, 2001. However, Strishak ignores the provision of the superceding contract which specifically contemplates and addresses the situation of Johnston declining to proceed with the case. As quoted earlier, paragraph 16 of the superceding agreement provides that if Johnston cannot perform the responsibilities in the contract including acting as lead trial counsel, then the result would be that Glorioso's fee would be reduced to 33 1/3% of the gross legal fee. Under the clear language of the contract, the failure of Johnston to comply with requirements of the contract does not dissolve the contract, but simply reduces the fee payable to Glorioso. This provision, along with other evidence in the case, shows that the parties had specifically contemplated Johnston declining to fulfill his responsibilities under the contract and accordingly provided for the effect of such an act. Had the parties wanted the effect to be a dissolution of the contract, they could have added that language. However, they did not and the contract must be enforced according to its clear and unambiguous terms. Therefore, the superceding agreement is still in effect and was not dissolved when Johnston declined representation. Under the terms of the superceding agreement, which governs the entitlement to attorney's fees, The Glorioso Law Firm is entitled to 33 1/3% of the gross legal fee because Johnston declined representation.
However, the question remains whether Fransen's fee should be deducted from the 33 1/3% payable to The Glorioso Law Firm. Quite simply, this issue is not addressed in the superceding agreement. Although the contract contemplates Johnston declining representation, it clearly does not address how the fee splitting agreement between Strishak and The Glorioso Law Firm would be affected by the retention and payment of a new attorney. Under Louisiana law, "when the parties made no provision for a particular situation, it must be assumed that they intended to bind themselves not only to the express provisions of the contract, but also to whatever the law, equity, or usage regards as implied in a contract of that kind or necessary for the contract to achieve its purpose." La. Civ. Code art. 2054. It is important to note that under the superceding agreement, if Johnston had performed his responsibilities under the contract as trial attorney, paragraph 9 of the superceding contract provided that any fee earned by Johnston and/or his law firm would be deducted from the Glorioso Law Firm's share of thirty eight percent (38%). Based on this provision, it seems implied in the contract that the trial attorney's fee would be deducted from The Glorioso Law Firm's percentage of the fee. There is nothing in the record suggesting to the Court that Glorioso's agreement to have Johnston's fee deducted from his percentage would only apply if Johnston was the trial attorney. In other words, this Court sees no reason why a change in trial counsel would change the agreement to have the fee deducted from The Glorioso Law Firm's percentage.
Furthermore, under article 2054, the Court may consider equity when determining what the parties bound themselves to under a contract in the absence of a provision addressing a specific situation. Under the Civil Code, equity, as intended in article 2054, is based on principles that no one is allowed to take unfair advantage of another and that no one is allowed to enrich himself unjustly at the expense of another. La. Civ. Code art. 2055. In this case, Vincent Glorioso's disbarment is what caused the problem of having to replace him with new trial counsel so close to the trial date and what prompted the parties to enter into the superceding fee agreement. In light of these facts, equity and the law favors placing the loss on the person whose fault caused the problem. See La. Civ. Code art. 1758. To allow Glorioso to still recover his entire fee under the contract when it was his conduct that required hiring a new attorney would reward Glorioso for his improper conduct and result in a windfall. However, on the other hand, the fees at issue were earned by work performed by Glorioso, and not Fransen who lost his case. The fund from which the fee is forthcoming resulted from a partial settlement obtained before Fransen was retained and was achieved largely through Glorioso's efforts. Considering this fact, equity also favors placing some of the expense on Strishak, because he would be unjustly enriched if the entire 22 1/2% of Fransen's fee is deducted from Glorioso's 33 1/3 % fee when Glorioso did significant work to earn the fee in the first place. Therefore, this Court finds that the equitable considerations in this case lead to the conclusion that the 22 1/2% fee of Fransen should be equally divided and deducted from both Strishak and Gloriosos' fee. Accordingly, 11 1/4% should be deducted from Glorioso's fee of 33 1/3%, thereby entitling him to 22.08% of the gross legal fees, and 11 1/4% should be deducted from Strishak's fee of 66 2/3%, thereby entitling him to 55.41% of the gross legal fee.
Next, although not technically an objection to the Magistrate's report and recommendation, Strishak included in his objection an argument under Rule 60 of the Federal Rules of Civil Procedure complaining that the intervention of The Glorioso Law Firm was improper under the rules. Strishak argues that the Magistrate improperly denied his motion to vacate the Court's order allowing the intervention because he was not served with the motion to intervene and he did have objections to such intervention, despite Glorioso's representation that no parties objected to the motion to intervene. This Court refuses to revisit this issue. The issue was not a part of the Magistrate's report and recommendation and this Court notes that the record reflects that Strishak has waived any such argument by making several appearances after the intervention and participating in multiple conferences without ever raising the issue of improper service for the intervention.
For example, See Record documents numbered 679, 701, 740, 752, and 800.
The next objection made to the Magistrate's report and recommendation was that of The Glorioso Law Firm, who objects to the ruling that it is only entitled to the 33 1/3% fee, and not a fee based on quantum meruit. Glorioso relies on the case In re: PE Boat Rentals, 928 F.2d 662 (5th Cir. 1991) for the proposition that attorney's fees may be divided only on a quantum meruit basis. As explained in the Magistrate's report and recommendation, the PE Boat Rentals case was decided under the now superceded rules of professional conduct. The current rule of professional conduct, Rule 1.5 of the Code of Professional Responsibility, permits a division of fees between lawyers who are not in the same firm when, by written agreement with the client, each lawyer assumes joint responsibility for the representation, the client is advised and does not object and the total fee is reasonable. Furthermore, since the PE Boat Rentals decision, two Louisiana courts have held that when attorneys enter into agreements regarding division of fees, the Code of Professional Responsibility does not prohibit enforcement of the agreement and does not require apportionment of the fee on a quantum meruit basis. Rice, Steinberg, Stutin, P.A. v. Cummings, Cumings Dudenhefer, 706 So.2d 815, (La.Ct.App. 4th Cir. 1998); Scurto v. Siegrist, 598 So.2d 507, 510 (La.Ct.App. 1st Cir. 1992). Therefore, this Court rejects The Glorioso Law Firm's argument that fees should be awarded on a quantum meruit basis when there was a fee splitting agreement between the two attorneys in accordance with the Code of Professional Responsibility.
III. CONCLUSION
For the foregoing reasons, the Court SUSTAINS IN PART AND DENIES IN PART the objections to the Magistrate's report and recommendation filed by The Glorioso Law Firm, A.P.L.C. and Andre Strishak and Andre Strishak Associates, P.C.